American Superconductor Corporation (NASDAQ:AMSC) Q1 2019 Earnings Conference Call - Final Transcript
Aug 06, 2019 • 10:00 am ET
Thank you. [Operator Instructions] The first question will come from Eric Stine. Please go ahead.
Just starting with REG. The DHS approval for the contract modification, I mean does that in any way help the process? Because I know ultimately, you want to get this -- get the PUC to allow this to be put in the rate base or that the utility would like to do that. Does it help that process in any way? I guess, would be the first question. And then, I mean clearly, it sounds like the line of sight is first to more work in Chicago, and then also, other utilities. So do you think that taking this step with DHS helps the process, whether it's Chicago or other utilities?
Yes. I think you absolutely nailed it because it retires that risk. It allows us to get cost recovery for this overall program. And you have to remember the reason that as we understand is that the utility embarked upon this is not just to do this scope, but there's a much larger scope that they eventually want to be able to get to. So we need to make sure that we continue to deliver on what we said and what we expect. And if we do that, we do really think that we have a winner, not only with Exelon, potentially in the future, but certainly, with many, many other utilities as well.
OK. Got it. Maybe just turning to D-VAR a little bit since, obviously, that the orders have been strong there and the results. I know that you do a lot of work with Vestas. You've talked about that. But when you think about that, I mean, is there a way to think about at least over the last couple of years, what your penetration is with them? And what you -- and just use them as an example, what the opportunity is with them going forward?
Yes. I think, generally, you have to realize that we've kind of changed our approach a little bit with D-VAR. We were selling principally for renewable connectivity to developers. We continue to do that in the traditional geographies that we've been in.
But we now have top-tier wind customers, and Vestas is a good example because sometimes they show as a 10%-plus customer, that as they are trying to develop more projects. And what we see is a lot of interim companies getting into the project management, project development and delivery, and that's when D-VAR gets procured. So we've been able to build on the back for that with top-tier wind turbine players, and that's helped translate into growth for the product line. And additionally, and maybe similarly, we focused on industrial customers.
And we've been able to see a number of large wins there. We see those continuing as well. It really changed the market and kind of the dynamics that we deal with to create what we hope will be a more predictable